Hey Loanasaurus, Watch the Bunnies and Dont Get Bageled!
September 3, 2009
The financial world has always served as a fertile breeding ground for language (for better or worse) and the debt markets are no exception. Words pop up to provide a name for new products or market phenomena, describe new trends, or playfully acknowledge a certain type of market player.
To show our appreciation for the creativity pumping through the veins of the leveraged finance markets, we here at LeveragedFinanceNews.com recently asked market participants to send us their favorite “Debt Speak,” language only the debt markets could create. From those suggestions and our own observations—which include the functional, such “add-on” or “BWIC,” and the descriptive, i.e. “amend and extend”—we’ve created a list of market lingo not found in traditional reference materials, either because it was coined too recently or because it’s too fun for them.
The following are some of the more colorful entries. You can find the complete “Debt Speak” list under “Features” on the homepage of this website. If you’d like to make an addition, send it to Richard.Kellerhals@sourcemedia.com.
Financier Drexeliticus: A financial executive who was part of Drexel’s high yield bond team in the late 1980s. If one has trouble spotting a Financier Drexeliticus, as one investor put it, “Search for the so-called smartest-guys-in-the-room talking amongst themselves after any significant financial disaster, and you’ll find a Financier Drexeliticus. Most have retired at least three times and continue to nurse a grudge against ‘the establishment,’ despite the fact that they now are the establishment. None of them have ever owned a high yield bond in his personal account for more than two weeks.”
To Get Bageled: A term referring to the peak of the frenzied loan market, when small investors would receive zero allocation on a “hot” deal.
Land of the Bunnies: A wild deal.
Loanasaurus: A banker, usually a graduate of a training program at a large commercial bank in the 1970s or 1980s, who regards the development of a secondary market for commercial loans with deep suspicion and nonbank involvement in the market as troubling. The Loanasaurus is uncomfortable with any loan not controlled by an asset-based borrowing base, and for his personal account invests solely in treasury bills and short-dated municipal bonds.
Macaroni Defense: A tactic by which the target company issues a large number of bonds that come with the guarantee that they will be redeemed at a higher price if the company is taken over. It is referred to as a macaroni defense because if a company is in danger, the redemption price of the bonds expands, sort of like macaroni in a pot.